Mortgage brokers, origination fees, price transparency and competition

Brent W. Ambrose, James N. Conklin

Research output: Contribution to journalArticlepeer-review

16 Scopus citations


This article examines the dynamics between mortgage broker competition, origination fees and price transparency. A reverse first-price sealed-bid auction model is used to motivate broker pricing behavior. Confirming the model predictions, our empirical analysis shows that increased mortgage brokerage competition at the Metropolitan Statistical Area level leads to lower fees. The findings are robust to different measures of fees as well as different measures of competition. We also provide evidence that broker competition reduces mortgage origination fees on retail (nonbrokered) loans as well. In addition, our results indicate that pricing complexity is an important determinant of fees, and increased broker competition is associated with a higher probability of a loan being priced with transparency. Our results suggest that mortgage brokers increase competition and lower fees in the mortgage market.

Original languageEnglish (US)
Pages (from-to)363-421
Number of pages59
JournalReal Estate Economics
Issue number2
StatePublished - 2014

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics


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